Simple Interest
Get to grips with simple interest using these Foundation and Higher GCSE Maths practice questions. The worksheet focuses on simple interest calculations, and the accompanying mark scheme breaks down each solution clearly. Suitable for AQA, Edexcel and OCR. Download the questions and answers for free. Simple interest is the same amount each year, based only on the original amount.
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These worksheets and mark schemes are original, written for Virtus Academy and checked against the current AQA, Edexcel and OCR specifications. Every worksheet comes with a full mark scheme.
Topic overview
Simple interest is interest calculated only on the original amount, called the principal. The same amount is added each period, so the total grows in a straight line.
The calculation is a percentage of the principal, multiplied by the number of years. If \(£500\) earns 4 percent simple interest for \(3\) years, the interest is \(£20\) per year, giving \(£60\) in total.
The distinction from compound interest matters. Simple interest never earns interest on the interest already added, so over several years it always yields less than compound interest at the same rate. Read the question carefully to see which is intended.
Revision notes
Calculating simple interest
Find the interest for one year as a percentage of the principal, then multiply by the number of years.
For \(£800\) at 5 percent for \(4\) years: one year gives \(0.05 \times 800 = £40\), so four years give \(£160\).
Interest versus total
Read whether the question wants the interest earned or the total amount in the account.
In the example above, the interest is \(£160\) but the total is \(800 + 160 = £960\). Giving the wrong one is the most common way to lose the final mark.
Working backwards
If you know the interest and the rate, divide to find the principal or the number of years.
If \(£90\) of simple interest is earned at 3 percent over \(2\) years, the yearly interest is \(£45\), and since that is 3 percent of the principal, the principal is \(45 \div 0.03 = £1500\).
Key points
- Simple interest is calculated on the original amount only.
- The same amount is added each period.
- Interest for one year, then multiply by the number of years.
- The total equals the principal plus the interest.
- Simple interest grows linearly.
- It always yields less than compound interest over time.
Worked examples
Example 1
Find the simple interest on \(£600\) at 5 percent per year for \(3\) years.
Working
Example 2
Find the total in an account after \(£1200\) earns 4 percent simple interest for \(5\) years.
Working
Example 3
\(£75\) of simple interest is earned on \(£500\) over \(3\) years. Find the annual rate.
Working
Common mistakes
Applying the rate to the growing balance.
That is compound interest. Simple interest always uses the original principal.
Giving the interest when the total is asked for.
Read whether the question wants the interest earned or the final balance.
Multiplying the rate by the years before converting.
5% for 3 years is 15% of the principal, but write it as 0.05 × 3 rather than 5 × 3.
Rounding money to more than two decimal places.
Money answers go to the nearest penny.
Exam tips
- State clearly whether your answer is the interest or the total.
- Work out one year first, then scale up — it makes the method visible.
- Check whether the question says simple or compound.
- Give money answers to two decimal places with the pound sign.
Key terms
- Principal
- The original amount invested or borrowed.
- Simple interest
- Interest calculated only on the original amount.
- Rate
- The percentage applied each period.
- Per annum
- Each year.
Related topics
Written and reviewed against the current AQA, Edexcel and OCR specifications. Spotted an error? Let us know.